Liability Of Directors In Corporate Arena: An Analysis

Rahul Sharma, OP Jindal Global Law School

ABSTRACT

In the ever-evolving world of corporate governance, the role and responsibilities of company directors, particularly with regards to their corporate actions, continue to generate much debate and be under legal scrutiny. This research work seeks to understand and examine the civil and criminal liabilities of a director who has ceased to act for a company, where the company has subsequently been found guilty of a compliance violation.1 The issue that the researcher seeks to address is particularly pertinent in modern corporate law, which no longer looks at a director’s liability for the company’s actions, as being co-terminus with their tenure. This research is quite significant for the legal fraternity, as it aims to bring clarity to the legal and ethical boundaries of directorial responsibilities post-tenure. Additionally, the study also aims to contribute to the broader discourse on corporate governance in a world where legal setups are rapidly evolving and there is an increasing emphasis on director accountability.2 In this way, the researcher aims to understand the practical implications of these liabilities on the conduct of directors both during and after their tenure in the corporate entity. The findings of this research are expected to provide a rich, nuanced and in-depth understanding of the liabilities of directors, making a significant contribution both to the academic community and to practical guidance in the arena of corporate laws.3 By separating the legal obligations of directors upon their departure from the corporation from the broader group of nonfiduciary terminations consequences, this research offers a critical vantage from which to appraise the implications for corporate governance and ethical business behavior.